Retailers Sour On Pre-Priced Snacks

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Retailers Sour On Pre-Priced Snacks

Snack brands wrapped in pre-priced packages are disappearing from store shelves, according to a report in Brandweek.

As rising shipping and commodity costs erode profit margins, some retailers are resisting stocking snack items that have the manufacturer's suggested retail price, usually 99 cents, printed on the package, the magazine reported.

Retailers do not have to honor a supplier's suggested retail price, according to anti-trust rules. However, not doing so could drop them out of favor on terms for future order fulfillment, depending on the clout of the manufacturer and popularity of the product.

Manufacturers are dropping the price tags altogether, according to the report. Kraft, for instance, removed the $1.99 suggested retail price from 12 Planters SKUs, ranging from 3 to 7.5 ounces, that are hitting stores now.

"Doing so allows retailers more flexibility and [retailers] like the control they have over pricing," a Kraft representative told Brandweek.

Kellogg salespeople have told convenience store buyers and wholesalers that it will phase out pre-priced single-serve packs, at least for Cheese-It snacks and Famous Amos cookies, by year's end.

One distributor told the magazine a Kellogg rep explained that retailers resisting and maintaining the 99-cent price point will be difficult for Kellogg if costs continue to climb. Kellogg did not comment for the article.

The trend applies to other categories outside snacks as well. Higher costs for aluminum and sugar prompted AriZona iced tea's parent company, Ferolito Vultaggio Sons, to raise the wholesale price on its 23-ounce cans of iced teas by 20 cents a case in December, according to Beverage Business Insights.

The "Big Boy," which had been pre-priced at 99 cents for at least seven years, generates about half of the Lake Success, N.Y.-based company's revenue. The price hike came after beverage distributors locked in retailers at the 99-cent price. Some distributors responded by sticking $1.29 price tags on cans.